Guelph food industry researchers expect meats and other grocery items to get much pricier in 2013

Prices to rise for foodstuffs

GUELPH – Meat and eggs and a bevy of other grocery store items will cost more next year, according to a forecast just issued by the University of Guelph.

A team of U of G researchers compiled the forecast which was released Thursday by the school. It asserted that Canadians will see price hikes for food staples such as meat, bread and cheese. The forecast also suggested the rising cost of foodstuffs will drive record numbers of people to food banks in 2013.

“Retail food prices are expected to grow faster than inflation and to increase steadily in the coming years,” said U of G Prof. Sylvain Charlebois, in a statement issued by the school. Charlebois is U of G’s associate dean of research and graduate studies in Guelph’s College of Management and Economics.

Charlebois is the lead author of the 2013 Food Price Index, an annual examination of Canadian retail food prices. Last year, the index accurately predicted an overall increase of no more than two per cent in this area.

According to U of G, predictions are based on factors affecting retail food prices, including climate, economic risks, energy costs, currencies and trade, and Canada’s food distribution and retail landscape. Also considered were domestic fundamentals such as consumer debt and inflation.

The forecast asserts that climate is again expected to be the most unpredictable economic driver of food prices. Drought conditions in North American this year pushed food pieces above expectations, especially for corn and soybeans.

“The coming year may see climate impacts on food prices incur bigger effects,” said Francis Tapon, in an online U of G release about the forecast. Tapon is an economics professor who also worked on the project. Current markets lack adequate reserves to safeguard against unforeseen shortages or demands, he said, and must be rebuilt in 2013 to help mitigate consumer food prices. “Any sort of production disruption without quality buffer stocks will be felt much more strongly on Canadian wallets.”

Overall, the Guelph researchers predict general food expenditures will increase between 1.5 and 3.5 per cent in 2013. Their predicted price increases for various foods:

• Beef and pork: 4.5 to 6.5 per cent increase, due to rising grain prices for cattle feed and higher production costs in the pork industry;

• Eggs: 3.5 to 5 per cent, due mostly to increases in animal welfare-based technology.

• Grain: 1.4 to 2.7 per cent; and

• Fresh vegetables, fruit and nuts, fish and seafood, and vegetables: one to three per cent.

According to the U of G statement about the forecast: The researchers expect that competition in Canadian food retailing — specifically the arrival in Canada of Target stores — will create a price war and eventually drive down food prices.

They also hope more awareness of rising prices will help reduce food waste, now at about 38 per cent of food purchased by Canadian households. “Restaurants are not doing that much better, with nearly half of all food purchased going to waste,” Charlebois said.